Mumbai, Dec 6 (IANS): The Reserve Bank of India (RBI) on Friday announced that a pilot with two large public sector banks on its MuleHunter.AI solution to identify mule bank accounts has yielded encouraging results and urged banks to join the initiative.

Banks are encouraged to collaborate with the Reserve Bank Innovation Hub (RBIH) to further develop the MuleHunter.AI initiative to deal with the issue of mule bank accounts being used for committing financial fraud, the central bank said.

MuleHunter.AI is an advanced AI technology that identifies and flags mule accounts, commonly used in money laundering schemes. The use of these money mule accounts is a common method adopted by fraudsters to channel the proceeds of fraud.

According to the RBI, a mule account is a bank account used by criminals to launder illicit funds, often set up by unsuspecting individuals lured by promises of easy money or coerced into participation. The transfer of funds through these highly interconnected accounts makes it difficult to trace and recover the funds.

The AI/ML-based model called MuleHunter.AI, being piloted by the RBIH, a subsidiary of the RBI. This model enables detection of mule bank accounts in an efficient manner, the RBI said.

Data from the National Crime Records Bureau (NCRB) indicate that online financial frauds are responsible for 67.8 per cent of all complaints related to cybercrime. This makes the effective provision of fraud prevention AI tools highly urgent. One of the biggest problems in fighting financial fraud is the exploitation of money mule accounts. These accounts are a key enabler of illicit financial activities; hence, tools like MuleHunter.AI are of paramount importance to protect the financial ecosystem and curb cybercrime.

The RBI has been taking various measures in coordination with banks and other stakeholders to prevent and mitigate digital fraud in the financial sector. These include RBI guidelines to regulated entities for strengthening cybersecurity, cyber fraud prevention, and transaction monitoring.

The Reserve Bank is also currently running a hackathon on the theme "Zero Financial Frauds" which includes a specific problem statement on mule accounts, to encourage the development of innovative solutions to contain the use of mule accounts.